Transcript: Tax Trouble

This is a partial transcript from "Your World with Neil Cavuto," October 31, 2005, that was edited for clarity.

DAVID ASMAN, GUEST HOST: Talk about hitting home — the president's tax panel getting set to issue its final report on Tuesday.

And one of the most beloved tax breaks in America, the mortgage tax deduction (search), could be whittled down a little bit.

Joining me now are the two men heading up the president's tax commission, former U.S. Senators Connie Mack and John Breaux.

Good to see you, Senators.

Senator Mack, first to you. Every time I hear of tax simplification on the Beltway, by the time it's all over — all the T's are crossed and I's are dotted — it turns out to be a lot more cumbersome than before. Why is this any different?

CONNIE MACK, FORMER U.S. SENATOR: Well, first of all, I would take some issue with that.

I think, in 1986, the code was reformed rather significantly.

But, since then, in the last almost 20 years, there have been 15,000 changes made to the tax code. And both Senator Breaux and I want to roll back that last 20 years. And we want to make the code simpler. And we think we can.

But you raise the point that this is the beginning. And there's a lot that can happen between now and tax reform some time next year.

ASMAN: Senator Breaux, you can give me a specific count? By what percent will the tax code be reduced because of what you are doing?

JOHN BREAUX, FORMER U.S. SENATOR: I will give you just the one example.

We spend $140 billion a year in complying with the current code because it's so complex, among other reasons. And, for example, the simplest 1040A (search) form takes about 75 lines...

ASMAN: Gentlemen, if you could stay with us, we will give you more chance after this.

(CROSSTALK)

ASMAN: This, of course Senator Arlen Specter. Let's listen.

(INTERRUPTED FOR LIVE EVENT)

ASMAN: All right.

As Senator Arlen Specter goes through a litany of decisions, he points out the fact that, unlike Harriet Miers, the last nominee to the Supreme Court, there is a long paper trail for Sam Alito, the judge who the president nominated this morning to be a replacement as a Supreme Court justice, over 300 decisions to review, some of which Senator Specter was going through right there.

We have kept our senators, who were here to talk about tax reform.

But we want to get them to answer a couple of questions about the president's new pick.

Senator Connie Mack, from what you know of Alito, I guess the big question is, is, are we going to see a filibuster from Democrats on it?

MACK: I don't believe so, because I think this individual is so well prepared, has such a great background. I think the president made the point this morning, probably he has a stronger record of service, better than anyone in the last 70 years.

His record in law school was outstanding. This is an individual that's going to come across very reasoned, very thoughtful. I think it's going to be very hard to filibuster.

ASMAN: So, let's ask a Democrat.

Senator Breaux, is there any way we are going to see a filibuster on this nominee?

BREAUX: Well, the answer to that question clearly lies with the gang of 14, the so-called seven Democratic and seven Republican senators, who said that they would not filibuster a court nominee, except in extraordinary circumstances.

They will really determine what happens. It's clear that they have a majority of votes to approve this justice. The question is whether they have 60 votes. And those 14 senators will be the ones that make that decision.

ASMAN: Senator Breaux, I cut you off in mid-sentence. You were about to explain how your tax simplification measure was going to simplify all of our lives. You have got about 20 seconds to tell us.

BREAUX: Just one example, David, is the fact that the 1040 form that a lot of people fill out now, you have got about 75 lines to deal with.

Under our proposal, it would be reduced in half. That's just one example of the many, many areas that we have simplified savings and so many parts of the tax code to make it simpler, and I think also fairer.

ASMAN: And, very quickly, Senator Mack, are we going to lose our mortgage deduction?

MACK: No. We're not going to lose the mortgage deduction. In fact, we're going to expand it, in the sense that more and more people will be able to take advantage of it.

ASMAN: But, if your mortgage is over $300,000, we do lose some of it, right?

MACK: Well, be careful about the number that you choose.

The report hasn't come out yet, but there will be a reduction in the cap. And so, it will come down from $1 million. But you have to, as I said a minute ago — or trying to say — that we are spreading this out, so that more and more people will be able to take advantage of it. Today, less than 30 percent of taxpayers actually take advantage of the interest mortgage deduction.

ASMAN: OK.

MACK: Under our proposal, everyone will be able to take advantage of it.

ASMAN: Gentlemen, we have got to leave it at that.

Senator Connie Mack, Senator John Breaux, thanks for coming on, sirs. Good to see you.

MACK: Thank you.

BREAUX: Thank you.

MACK: Sure.

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